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New Product Development and

Product Life-Cycle Strategies

Chapter 11PowerPoint slides

Express version

I nstructor name

Cour se name

School name

Date

Principles of Marketing,Sixth Canadian Edition
http://www.pearsoned.ca/kotler/


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11.2

Learning Objectives

After studying this chapter, you should be able to:

Explain how companies find and develop new-product ideas

List and define the steps in the new-product development

process

Describe the stages of the product

life cycle Describe how marketing strategies

change during the products life

cycle


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Major Stages in New Product Development

Idea generation:systematic search for new ideas

Internal sources:brainstorming

External sources:customers, competitors,

distributors and suppliers

Idea screening:identify

good ideas and drop poor ones

Usefulness to consumers

Good for company

Fit with objectives and

strategies

Have the resources

Add value

Figure 11.1


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Concept development:detailed version of theproduct concept in meaningful consumer terms

Concept testing:testing new-product concepts forconsumer appeal

Marketing strategy:initial

strategy for product concept: Target market, positioning,

and sales, market share, and

profit goals

Price, distribution, and

marketing budget Strategy statement, long-run

sales, profit goals, and

marketing mix

Figure 11.1


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Business analysis:review of sales, costs, and profitprojections to determine if they meet company

objectives.

Product development:developing the product

concept into a physicalproduct

Large investment

Building a prototype

Testing for safety,

durability, andacceptability

Figure 11.1


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Test marketing:testing the product in morerealistic market settings

Determine the target market profile

Assess consumer

acceptability, trial, repeat

purchase rate

Evaluate trade reception

and distribution penetration

Design effective media

plans

Standard test markets Controlled test markets

Simulated test market

Figure 11.1


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Commercialization:introducing a new productinto the market

Introduction timing

Market rollout or full-scale

introduction

Sequential productdevelopment

Simultaneous (team-

based) product

development

Figure 11.1


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11.8

Product Life-Cycle Strategies

Product life cycle (PLC):the course of a productssales and profits over its life

Figure 11.2


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Styles, Fashions, and Fads

Style:basic and distinctive mode of expression

Fashion:currently accepted or popular style in agiven field

Fad:a fashion the enters quickly, adopted with greatzeal, peaks early, and decline very fast

Figure 11.3


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Summary of PLC (Table 11.2)

Characteristics: Introduction Growth Maturity Decline

Sales Low Rapidly rising sales Peak Declining sales

Costs High cost Average cost Low cost Low costper customer per customer per customer per customer

Profits Negative Rising profits High profits Declining profits

Customers Innovators Early adopters Middle majority Laggards

Competitors Few Growing number Stable number Declining number

Marketing objectives:

Create product Maximize market Maximize profit & Reduce expenditure

awareness and trial share defend market share & milk brand

Strategies:

Product Offer basic product Offer product Diversify brand and Phase out weak

extensions, service models items

Price Use cost-plus Price to penetrate Price to match or Cut price

market best competitors

Distribution Build selective Build intensive Build more Selective; phase out

distribution distribution intensive distribution unprofitable outlets

Advertising Build awareness Build awareness & Stress brand differences Reduce to level needed

early adopters/dealers interest mass market and benefits to retain hard-core loyalsSales promotion Heavy sales promotion Reduce promotion due Increase to encourage Reduce to minimal

to entice trial to heavy demand brand switching level

Source: Philip Kotler and Peggy Cunningham, Marketing Management: Analysis, Plann ing, Implementation,

and Control, Canadian 11th Edition, Pearson Education Canada, Toronto, Ontario, 2004, p. 347


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In Conclusion

The learning objectives for this chapter were:

Explain how companies find and develop new-product ideas

List and define the steps in the new-product development

process

Describe the stages of the product

life cycle Describe how marketing strategies

change during the products life

cycle

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